Choice of law clause in general terms and conditions valid?

The Higher Regional Court of Oldenburg (OLG Oldenburg) was presented with a legal question by an online retailer concerning whether this retailer may stipulate in its general terms and conditions that German law shall apply to all contracts concluded with it in the context of distance selling.

An online retailer whose offers were also directed at consumers abroad agreed in its general terms and conditions on its online shop and in its Amazon offers the following choice of law clause:

"These contract terms are subject to German law."

Following several complaints from competitors, the Zentrale zur Bekämpfung unlauteren Wettbewerbs Frankfurt am Main e. V. ("Competition Centre") issued a cease and desist letter in respect of these choice of law clauses and demanded that their use be discontinued. It took the view that the clause was in breach of German law on general terms and conditions and was therefore invalid.

The online retailer subsequently filed a declaratory action against this cease and desist letter in order to have the question clarified by the court.

Decision of the court

As the Competition Centre explained in a press release, the Higher Regional Court of Oldenburg (OLG Oldenburg) decided by order dated 23.09.2014 (Az. 6 U 113/14), just as the initially called Regional Court of Oldenburg (LG Oldenburg) had done, that the choice of law clause was invalid.

The clause gave the impression that German law was exclusively applicable, since it did not clearly emerge from the clause that the choice of law does not lead or is not intended to lead to the consumer being deprived of the protection afforded to him by the mandatory provisions or the case law of his country of residence. The clauses were therefore not clear and comprehensible and thus contrary to competition law.

Conclusion

Online retailers should not agree to choice of law clauses in theirgeneral terms and conditionsif their offer is also directed at consumers from third countries. These would be invalid and thus also contrary to competition law.